Australian CEOs getting on with business, despite threats to growth::

CEOs are more optimistic about growth than international counterparts, despite concerns about over-regulation and the Government's response to Australia's fiscal deficit, according to a PwC report launched today.

Forty-three percent of Australian CEOs are very confident of growth in the next 12 months, up 9 percentage points from last year, compared with 39 percent of CEOs globally. In the longer term 55 percent were very confident of growth in the next three years, up 21 points from the year before.

However 60 percent of Australian CEOs believe there are more threats to growth today than three years ago, citing over-regulation, the handling of Australia's debt burden, and cyber security risks amongst their top concerns.

Sentiment about global economic growth has also flat-lined, with only a four percent lift in the proportion of Australian CEO's who believe global growth will improve in the next 12 months, to 38 percent this year.

According to PwC Australia CEO Luke Sayers, the mixed results reflect an uncertain political and legislative environment in both Australia and abroad.

"Both the Government and business community understand what's required in order to secure Australia's long term economic future, but unfortunately the current political environment in Canberra isn't conducive to delivering outcomes," Mr Sayers said.

"Part of that problem is clearly a difficult senate, but the broader and more important issue is a failure, by both business and government, to properly communicate the rationale for change to the broader community."

"The next five years will be critical if Australia is to keep its privileged place amongst the world's advanced economies. Beyond that timeframe it will get increasingly difficult for Australia to fully participate in, and withstand shocks from, the global economy."

"We need to see significant movement on the development of social and economic infrastructure to support both our ageing population and participation in the global digital economy. Fundamental reforms, including tax reform, must be addressed."

Mr Sayers' comments were reflected in the findings of the Australian CEO report:

- 76 percent of Australian CEOs cited geopolitical uncertainty as one of their top economic and policy threats to growth.

- 74 percent of Australia's CEOs thought a priority of government should be to ensure an internationally competitive and efficient tax system, with 69 percent believing the government has been ineffective in achieving this.

- Australian CEOs are the most concerned about over-regulation (95 percent very concerned) compared to their global peers at 78 percent.

More than half (55 percent) of Australian CEOs expect to boost headcount in the next 12 months. Only 12 percent plan to reduce the size of their workforce, compared to 21 percent of their global peers. Australian companies are also well ahead of their international counterparts when it comes to promoting diversity, with 86 percent saying they have a diversity and inclusiveness strategy, compared to 64 percent globally.

"When talking to clients the mood seems to be one of cautious optimism, and it's pleasing to see that being borne out in areas like hiring intentions," Mr Sayers said.

"The philosophical argument about the benefits of a more diverse workforce has been won. What we now need is both genuine improvement in areas like gender, and also a more sophisticated understanding of diversity, one that extends to diversity of cultural experience and skills."

Cultural experience will become increasingly important in terms of capturing opportunities abroad, with Australian CEOs naming China as the top destination for offshore growth (67 per cent), followed by the US (45 per cent), Japan (21) and Indonesia (21).

But despite the talk about the opportunities in China and Asia more broadly, Mr Sayers believes many companies have failed to convert good intentions into action.

"The level of direct Australian investment and business activity in Asia, beyond trade, is woeful," Mr Sayers said.

"We invest more in New Zealand than we do in both China or Indonesia and we can't assume geographic advantage automatically translates to economic advantage in the Asian region.

"Success in Asia requires companies to nurture long-term relationships and invest in putting people on the ground. Companies that want to capture a share of the region's growth can't afford to treat it as a fly in, fly out proposition."

Domestically, CEOs are looking at joint-ventures, partnerships, and technology as both sources of growth and competitive threats. Digital innovation and its impact on customer behaviour is a particular concern: nine out of 10 CEOs in Australia say it is the number one disruptive trend they face.

"Many companies today are becoming more and more like tech businesses, particularly when you consider how they interact with their customers and deliver goods and services," Mr Sayers said.

"Australian CEOs have switched onto the fact that they don't need a digital strategy, they need a business strategy that's fit for the digital age."